you fellas are so funny. u believe everything on the interweb. there is a sucker that is born everyday.
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Trader Loses $377,000 Day Trading TSLA
- Thread starter realtrades
- Start date
Operative phrase "major size". This guy is one trade from blowing up his account. When he does not have proper risk management and keeps rolling the dice, he will blow up. Only, question is when? He said the loss is only 15% of his total account and he is still a millionaire. I followed him on Twitter to see what happens.
So his account was $2,517,333.33.
What is the common wisdom for % of total account per trade? It's hard for me to follow such rules because usually I don't have any money in trading until I see something I think is a good "bet." So my account will be zero before I make one trade.
I've only recently started hedging every bet to cap the losses. But as you know, this also caps the gains so I'm not sure it's worth it this way.
I could have made thousands of dollars with TSLA options, but I made $595 instead.
So his account was $2,517,333.33.
What is the common wisdom for % of total account per trade? It's hard for me to follow such rules because usually I don't have any money in trading until I see something I think is a good "bet." So my account will be zero before I make one trade.
I've only recently started hedging every bet to cap the losses. But as you know, this also caps the gains so I'm not sure it's worth it this way.
I could have made thousands of dollars with TSLA options, but I made $595 instead.
They recommend based on numerous studies to risk no more than 2% per trade. If you are a newbie trader, they advise to risk no more than 1% per trade. This is to minimize the chances of blowing up your account. If you have just 5 trades working for you, you are risking 10% of your capital which could result in your capital having a drawdown of 10%. This is on a worst case scenario of course, but, the safest assumption to make. The bigger the drawdown, the harder it is to recover from.
All that matters is :
#1. Is it a real deal
#2. His acc size
This. ANY number in isolation is irrelevant. In this case, the stated amount might represent >50% of his port or <1%.
EDIT: I see the context was subsequently provided.
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I dont know if Madaz trader is real, but I like his stuff.
This time Justin Oles, the "Garage Daytrader" traded TSLA better than Madaz. Very good and consistent guy, but he takes too big losses sometimes.
Madaz is real and legit. I was a sub to his chatroom for like 1-2months then I cancelled. I saw him call these types of trades out in real-time. So it's real. But his style is not for the faint of heart. That's why I cancelled the subscription. When he's on a roll, he banks it.
But when he's wrong he bet quite a bit and down -$90K(i saw that live) on TSLA nevertheless.
This time around he's down half a million on TSLA. He's not a real TA chart reader. He's more of a tape reader. I use both techniques but I'm more of a chart TA guy.
But where I see TA chart analysis helps is sometimes there's a lot of fake sizes giving the illusion of a stock going one way or another. Yet from my years of chart readings it would tell me not to enter. He enter in size and then boom it tanks. He's fast enough to get out most of the time but on times he's not fast then he's down quite a bit.
To be fair, he's quite good at tape reading(better than me) and thus able to scalp with 90% win rate stretches at time.
I'm more a TA chart reader and hold longer(still intraday trends).
I also potentially lost money with TSLA. I have a bull call spread (433 and 435). I have until Friday for it to go back above 435 (or break even at 433.85). Otherwise I'll lose a whole -$86.30.
Capping your losses and rewards is a double edged sword. The previous week, I paper traded TSLA bull call spread. If I would have bought naked call, I would have made some ridiculous percentage like 2000%. But with a spread, I only "made" $595 I believe.
Capping gains kind of makes everything pointless in a way lol because even if you win, you don't win that much. But I guess it's better than losing everything.
If you buy options, be it calls or puts, your risk is already capped to the option premium on a worst case scenario. Your gains to the upside unlimited and your gains to the downside, limited to zero. Why not just take the trade outright? You can always exit your position if it does not work out. You do not have to lose 100% of your option premium. At any time before options expiration, you can cut your losses and exit at say 30-50% loss on your premium?
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If you buy options, be it calls or puts, you risk is already capped to the option premium on a worst case scenario. Your gains to the upside unlimited and your gains to the downside, limited to zero. Why not just take the trade outright? You can always exit your position if it does not work out. You do not have to lose 100% of your option premium. At any time before options expiration, you can cut your losses and exit at say 30-50% loss on your premium?
True.
I need to decide whether it's going to be 1% of my account value or 1% of my total assets.
Or perhaps 1% of liquid assets.
If you buy options, be it calls or puts, you risk is already capped to the option premium on a worst case scenario. Your gains to the upside unlimited and your gains to the downside, limited to zero. Why not just take the trade outright? You can always exit your position if it does not work out. You do not have to lose 100% of your option premium. At any time before options expiration, you can cut your losses and exit at say 30-50% loss on your premium?
Although...
If I buy naked calls, isn't the time decay going to ruin me most of the time? How to avoid that?
Although...
If I buy naked calls, isn't the time decay going to ruin me most of the time? How to avoid that?
Naked calls is when you sell the call option. You are not naked when you buy a call option as you paid for the premium. Time decay is present in all options in the stockmarket. You can mitigate time decay by buying more time like 3 months out, deep in the money calls and puts. You put the odds in your favor. Expect a lower win rate like 30-40% winning rate but, as long as your winners are several multiples of your losers, you should make monies. Think like a casino.
Naked calls is when you sell the call option. You are not naked when you buy a call option as you paid for the premium. Time decay is present in all options in the stockmarket. You can mitigate time decay by buying more time like 3 months out, deep in the money calls and puts. You put the odds in your favor. Expect a lower win rate like 30-40% winning rate but, as long as your winners are several multiples of your losers, you should make monies. Think like a casino.
If I'm writing call options, my gains are capped at the original premium. I have unlimited loss potential. Isn't that right?